Apple eyes ISPs to sell 'iTV'

Analysis What are we to make of the claims from moles within Canada's two key telcos that both companies have Apple HD TVs in their labs?

That Apple is indeed working on an own-brand television now seems certain. Equally sure seems the notion that the so-called 'iTV' won't be remotely revolutionary, though it will be spun that way by the glib-tongued manufacturer.

So net TV is a big part of Apple's play. You wouldn't expect it to do otherwise, given iTunes' film and TV show sale and rental shops, and it's specifically targeting the iTV at the growing number of punters who get their video content from the web rather that cable or live TV.

That's a trend. Last week, Centris, a US-based market research company, revealed that 13 per cent of pay-TV customers in the States - cable TV subscribers, for the most part - are looking to reduce or even end their monthly spending on TV content.

Folk stepping away from cable are mainly motivated by financial pressures, but also by the sense that they're not using the service as much as they might. There are too many channels to keep track of, and too much crap being used to fill them.

Many pay-TV customers are looking to cheaper, online services to keep them entertained, Centris found.

Indeed, why pay a lot to watch a show one month when you can view it more cheaply a few months later? And you can pay just for the content you want, not all the channels that you don't. In the past, consumers wanted to watch programmes when their friends and colleagues did, so they could engage in the national debate about them. Folk really did discuss who shot JR, once.

These days, with many more channels aimed at more diverse viewer groups, that kind of event TV is much more rare than once it was.

These trends favour the likes of Netflix, Amazon and YouTube, not to mention TV-to-viewer mediation companies like TiVo. In January, Tivo said 38 per cent of viewers no longer watch shows live, but come to them later, at a time that suits them. They use DVRs like the ones Tivo sells, they use downloads, or they use catch-up TV services.

Apple is ready to serve all these - iTunes for downloads and rentals; apps for third-party services, from Netflix to BBC iPlayer - but it knows chucking a new TV out into the open market isn't going to work. There's too much competition from companies better known than Apple is for TV products. Prices have never been lower. Margins are paper thin.

Better, then, to leverage the expertise of big ISPs to promote kit directly to their broadband customers - the very folk most keen on net-based content services - perhaps reducing the set's price to punters through broadband subscription subsidies.

This approach is essentially the one Tivo is taking in the UK through its partnership with Virgin Media. Virgin's box, however, is too closely tied to its cable TV offering, whereas Apple's is likely be relevant to all broadband users, making it a stronger proposition for the time when Apple decides it can make the set available on the open market.

Oh, and don't expect lots of storage: the iTV won't be a DVR. For Apple, the cloud is the new DVR.

None of the iTV's functionality is revolutionary, so Apple will rely on its Siri voice-recognition tech and, if the Canadian moles are to be believed, an integrated webcam that can track viewers' hand and body movements too.

These are nothing special, either. Microsoft is already using its Kinect tech for this, and other TV makers are looking to incorporate gesture-recognition into their sets. But Apple has a knack of spinning its products as cutting edge, and it will be one of the first to do movement and voice control together.

And they'll do to attract coverage which, in turn, will stress the desirability of the product. Its brand and pricing will emphasise exclusivity.

But these technologies are just foot-in-the-door gimmicks. Whatever Apple does, all TVs will have gained these control mechanisms within five years. Their IPTV front ends - now crude and populated with too little decent content - will evolve too. They haven't pushed the feature anywhere near well enough.

But Apple has a better UI in its Apple TV set-top box now and, so long as it doesn't wait too long, it's going to stand out from the crowd.

True, the Apple TV UI hasn't been head and shoulders above other IPTV set-tops and media streamers, but all these boxes and Apple's are minority interest kit not the mainstream proposition a TV would be. It's that desire to enter a bigger, more lucrative market that has persuaded Apple to develop a TV rather than stick to its $99 set-top box "hobby".

Don't expect Apple to alter the TV landscape the way it did the smartphone business, but with its undoubted marketing skills and a colossal pile of cash to spend on promotional material, it is, we think, going to stir up the market. ®